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Monday, 24 November 2014

Latest agri-business news from Ukraine and Russia

New Holland are reporting 2014 Ukraine and Moldova sales will
be down 40% on the previous year.

They say devaluation of the hryvnia and
military action are the reason sales have dropped from 800 units to 500
units in 2014.

They can add to that a massive drop in commodity prices which
meant many farmers have put off planned capital purchases for just one more season.

Broadly speaking a farming business should be looking to
depreciate over four to six years depending on the machine; in Ukraine it’s
often double that and with hard hours.

The Dutch are leading a project looking at improving the Ukrainian
agricultural land market by assisting in the development of a legislative
framework.

Most would agree reforms in the land sector would attract
investors but it seems every government since Kuchma thought liberalisation of
land ownership rights too hot to handle and kicked it into the long grass.

A moratorium on the sale of agricultural land has been in
place since 2004 and was recently extended until 2016.

That may change under the latest administration who seem to
want progress and it could be a way of raising revenue for a cash strapped
country.

The main problem is summed up by Andriy Koshyl, president of
the Land Union of Ukraine when he said “we have a problem here because we don't
know today's price for our land”.

The US has published its latest update on Ukraine with all
the usual gumph about capacity building and supporting democratic and
constitutional reforms.

The bit that relates to agriculture is thin on detail but
includes helping Ukrainian authorities to carry out reforms that will boost
private sector investment in agriculture, improve access to credit and capital
investment for farmers, and streamline agricultural sector regulation, all of which just
sounds awesome.

The US has already committed $320 million in assistance this
year in addition to $1 billion sovereign loan guarantee and last week in Kyiv Joe
Biden announced they will commit a
further $20 million, pending approval from Congress.

You could put another zero on the end of that
and it still wouldn't be enough.

Meanwhile in Southern Russia Dmitry Medvedev is keeping
himself busy today visiting a farm in Krasnodar where he will hold a meeting of
the Council on Modernization of Russia’s Economy and Innovative Development.

Can’t wait to see the outcome from that talking shop.

Moving even further south and the Caucasus are being talked
up as a major fruit and vegetable producer to supplying the rest of Russia in response
to sanctions as it was in the good old days.

Problem is while everyone agrees it has the climate etc no
one seems willing to stump up funds to rebuild glasshouses and replant the
orchards that have long since fallen in to neglect.

Moscow will tighten restrictions on meat products travelling
from Belarus to Kazakhstan following attempts to sell banned imports in Russia
so say authorities.

Personally I think it might just be in response to comments
from Alexander Lukashnko when in a strange attempt at marketing local produce said
"Belarusian [food] is of substantially higher quality…there is no
toilet paper in the salami and never was...such facts have been discovered at
Russian enterprises - toilet paper, soy, all kinds of additives”.